+If my home is governed by a body corporate or subject to a cross lease, what do I still need to think about for my home's Sum Insured?

Insurance for shared ownership

If your home is an apartment, part of a gated community, or you share property with your neighbours, it's important to consider how this may impact on your home's Sum Insured.

Shared use and ownership

Property can be owned in a variety of ways and that can affect owners' responsibilities in relation to that property. In the event of a claim in relation to insured property that's shared between two or more owners, the way the claim by any one owner is settled will usually be based on the extent to which that owner is responsible for the property.

Boundary fences

Fences on a boundary between two or more properties are usually co-owned by all the owners whose land shares that boundary. However, some fences on your boundary may be your sole responsibility to maintain and repair in full. This is often the case if your home borders a public place.

If one or more of your neighbours share ownership of a boundary fence with you, particularly expensive fencing, it's a good idea to discuss it with your neighbour(s) and agree on the proportion of fence each of you are responsible for and should allow for in setting your Sums Insured.

If you're unsure about a particular fence, perhaps discuss it with your neighbour(s) and a legal advisor, if necessary. The Fencing Act 1978 can also assist with establishing responsibilities for repairs and maintenance to fences.

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A fence that is on your property boundary, and borders a public place. You are likely to be primarily responsible for this fence.

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A fence that is on your property boundary, and borders a public place. You are likely to be primarily responsible for this fence.

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A fence that is on your property boundary, and borders a public place. You are likely to be primarily responsible for this fence.

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A fence that is on your property boundary, and borders a public place. You are likely to be primarily responsible for this fence.

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A fence that is on your boundary, and borders a driveway (or right-of-way) shared by multiple homes. The three homeowners could determine their respective responsibilities in relation to this fence and allow for their shares accordingly in setting their respective Sums Insured.

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A fence is on the boundary line between two neighbours. It would be a good idea for the two homeowners to determine their respective responsibilities in relation to this fence and allow for it in their Sums Insured.

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A fence that may or may not be on or near the property's boundary, depending on the status of the driveway area it borders. The homeowners of this house and of the driveway should probably determine their respective responsibilities in relation to this fence and allow for it their Sums Insured.

Ownership of walls on the boundary of one or more properties (including party walls) can take a variety of forms; for example, some are shared in common, others are owned by one party but subject to rights in favour of other parties.

Your policy may provide cover on Retaining walls up to a policy limit or cover limit. If you're concerned about whether the cover provided under your policy is sufficient it's a good idea to discuss the wall with your neighbour(s), consider obtaining legal advice to determine the ownership status, and consider obtaining a professional valuation to help you all understand the likely cost of rebuilding the wall. That way you can work together to ensure everyone's insurance is appropriate should you need to claim for damage to the wall.

It's important to note that some retaining walls may be covered by the Earthquake Commission as part of the land for certain kinds of natural disaster damage. However, if they are covered it is not on a replacement basis, so the likely full cost of rebuilding the wall(s) should still be considered when setting your Sum Insured.

Shared driveways

Some homes may share a driveway with other neighbouring homes. If that's the case, the ownership of the driveway may be held in a form of cross lease, or use of the driveway may be governed by an easement. These arrangements help everyone achieve full practical use of the driveway.

If you're not sure whether your home is part of a cross lease property you should talk to your legal advisor and check your property's Title documents for reference to a 'plan of flats' (or similar wording) that sets out the various areas the cross lease applies to. You could also talk to other neighbours who may have been involved in the cross lease. For properties with easements see the 'Right of way' section below for what usually appears on your property's Title documents.

There will usually be some responsibility for each neighbour to bear a proportion of the cost of repair and maintenance of a shared driveway. The responsibility will normally be described in the relevant cross lease or easement. Once you understand the extent of your responsibility in relation to the driveway you can consider what allowance to make for it when setting your Sum Insured. For example, if the driveway you use is quite long you may decide to speak to the neighbours who use part of it and agree on obtaining a professional valuation of the likely cost of rebuilding it. That will help you all determine the amount each of you allow for the driveway in your insurance.

Cross leases with dwellings

A cross lease is an arrangement designed to allow you to effectively own part of a property and your neighbour(s) to effectively own another part, but that enables you and your neighbour(s) (together 'the property owners') to also share parts of the property such as common walls, pathways and driveways.

The way it is usually set up from a legal point-of-view is that the property owners effectively co-own all the relevant land and buildings together. The property owners acting as a group then lease you your particular building or apartment (referred to as 'flats' or 'areas') and sometimes also specific outdoor areas and garages of which you have exclusive use. This cross lease is normally for a very long term (for example, 999 years). The other property owners (your neighbours) also lease their respective parts from the property owners acting as a group. Normally, you all share responsibility for and use of any common property like driveways.

There are many different ways these cross leases operate, depending on how they are legally created. Under
IAG-underwritten home policies it makes sense to understand which property you are responsible for. So you can be clear about your responsibility in relation to your property. Check your property's Title documents for reference to a 'plan of flats' (or similar wording) that sets out the various areas the cross lease applies to, and if you're still unsure, talk to your legal advisor.

Remember that IAG-underwritten home policies only cover some buildings and structures on the land, but not the land itself, so you should be checking which buildings and structures you're responsible for and to what extent.

Rights of way

Rights of way are a right to pass and re-pass over private land that is owned by another party. These often exist to allow access to homes that do not have street frontage. As an example, a right of way could effectively allow a homeowner who lives behind another property to use a certain part of the property in front for access. Without this arrangement the home owner living at the back may not have legally secure access to their home.

A right of way (normally legally described as an 'easement') may also exist to allow entities that provide utility services such as telecommunications and water to lay their cables, pipes and other similar conduits across a neighbour's property to service a home.

Homeowners who make use of a right of way are often required to contribute their share of the cost for maintenance and repair of the area subject to the right of way. If a homeowner has sole use then they may be required to pay 100% of these costs.

The entitlements and responsibilities for rights of way are almost always registered on the Titles of the properties involved. The easement that creates the right of way is usually clearly referred to as a 'right of way'; the property that the right of way crosses is 'subject to' the right of way and referred to as the 'servient tenement', while the properties that have the use of the right of way have it 'appurtenant' to the Title and are referred to as the 'dominant tenement'.

If you think your home may involve a right of way, talk to your legal advisor and check the Title documents for your property. You should also talk to any other neighbours who own the property over which the right of way is used, or who also use the right of way.

Once you understand what your responsibilities are in relation to any right of way property, you can then consider what allowance to make for it when setting your Sum Insured.

Body corporate-governed dwellings

Buildings that comprise multiple, individually-owned units (such as apartment buildings containing residential dwelling units, or buildings containing a combination of commercial units and residential dwelling units) are often governed by a body corporate under a 'unit title' scheme.

Individual buildings that have parts of it shared by various other building owners - such as common walls, grounds, landscaped areas and driveways - can also be governed by a body corporate under a unit title scheme.

If your home is in one of those situations, you can speak to the body corporate secretary or committee about the insurance in place for your unit, the building and all common property. It's normal for a body corporate to have one insurance policy that covers all the units as well as the common property. This means that all the property remains insured on a consistent basis for everyone involved.

It's also a good idea for a body corporate to periodically review the level of insurance cover it has to ensure that it's up-to-date and complies with the Unit Titles Act 2010.

If you're not sure whether your home is part of a body corporate talk to your legal advisor and check your property's Title documents for reference to the estate (for example 'stratum in freehold'), the legal description (and whether it refers to your specific unit) and whether it makes reference to the Unit Titles Act 2010 or Unit Titles Act 1972.

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